- FOPs, what’s new?
- DIYA.City and gig contracts
- Regulation of artificial intelligence
- Grants and international cooperation
The waves raised in the community by the discussion of a potential VAT for FOPs after one million hryvnias in annual income have not yet settled, and discussions will continue, as this is neither the first nor the last such initiative. Probably, every FOP has pondered whether their activity will make economic sense if they hire an accountant to manage this complex tax. But it should also be said that the FOP itself was a wonderful state initiative, thanks to which almost the entire IT industry was able to develop freely. So, what good and not-so-good things are in store for us in the near future?
FOPs, what’s new?
The limit after which a third group FOP becomes a VAT payer has been raised, and in any case, throughout 2026, it currently stands at just over ten million hryvnias per year. It is planned that in 2027 it will decrease, but still not to one million, but to four million hryvnias.
So far, everything related to VAT is a draft law that has not yet been adopted. It should be noted that after heated discussions in society, a transitional period was added to the project for those who will fall into the group of VAT payers, along with additional reliefs from this burden, but it is still unclear whether this law will actually work as a law, how all this will be administered, etc.
Those who submit reports themselves should check the tax payment details this summer: the details for paying the military tax have changed.
According to DOU, this year there has been an increase in FOPs that are closing down, and a decrease in those who are opening a FOP for the first time.
But what is there instead of FOPs?
Also read: How to register a FOP for IT freelancers and which group to choose
DIYA.City and gig contracts
Before the emergence of DIYA.City in 2022, most IT specialists became FOPs almost automatically when starting their first project. Of course, there were also employees registered under regular employment contracts, but among programmers, testers, and other technical specialists, this was rather an exception. Personally, I hardly know anyone who started their career this way.
Now there is another option for collaboration — gig contracts.
To hire people under gig contracts, a company must become a resident of DIYA.City. To do this, it must be a legal entity (for example, a LLC) and meet a number of requirements. In particular:
- be registered in Ukraine as a legal entity;
- operate in the areas defined by law (software development, testing, cybersecurity, AI, GameDev, SaaS, R&D, EdTech, and others);
- receive at least 90% of its income from these types of activities;
- have at least 9 specialists;
- pay them an average remuneration of at least the equivalent of 1200 euros per month.
For startups, the entry conditions are simpler.
What does the company get in return? First of all — a special tax regime. It can remain under the classic profit tax (18%) or switch to the tax on withdrawn capital (9%).
For employees and gig specialists, special tax conditions also apply: 5% personal income tax, 5% military tax, and the single social contribution (SSC), which is calculated only from the minimum wage, not from the total remuneration. These rates apply only if the company meets the requirements of the DIYA.City regime. Overall, the tax burden remains significantly lower than under a regular employment contract, although after the increase in the military tax, the difference between a gig contract and a FOP has become more noticeable.
In addition, the company receives a legally regulated model of cooperation with specialists, clear rules regarding the transfer of intellectual property rights, the ability to detail NDAs, conditions for terminating cooperation, and other mutual obligations. If the company has critical status, it can also reserve its employees and gig specialists. The status of a DIYA.City resident does not grant rights to reservation by itself.
For many years, it was the FOP that provided the flexibility that classical employment did not foresee: minimal bureaucracy, lower tax burden, simpler interaction between the company and the specialist.
To simplify greatly, the gig contract legalized a working model that had long existed in Ukrainian IT. A person worked for years in one company, had a team, a manager, regular payments, and was effectively part of the staff, but legally remained an independent entrepreneur.
The gig contract has become a kind of compromise between a classic employment contract and a FOP. It retained a significant part of the flexibility that the industry had become accustomed to, but at the same time provided companies with a clearer legal model of cooperation, and specialists with some social guarantees.
For example, a gig contract may provide for:
- paid annual leave;
- payment for temporary incapacity;
- additional benefits (training compensation, medical insurance, etc.);
- clearly defined rights and obligations of the parties.
At the same time, the specialist no longer needs to open and maintain a FOP, submit declarations, pay taxes independently, and monitor changes in legislation — the company takes care of all this.
This is a good solution for those who have worked in one company for many years.
In contrast, if you work with several clients at once, constantly change projects, or receive income from various sources, the FOP remains a more logical option.
For the company, a gig contract means more personnel and accounting work, as it administers taxes, military tax, and personnel records itself. In return, it receives a much clearer legal model of cooperation than the classic scheme with FOPs, where actual labor relations were formally registered as entrepreneurial for years.
At the same time, DIYA.City has not replaced FOPs. Most resident companies still work simultaneously with FOPs, gig specialists, and staff employees. Thus, we are not talking about a radical change, but rather the emergence of another tool that allows the company and the employee to choose a format of cooperation depending on the specific role and business needs.
Regulation of artificial intelligence
Another area that is just beginning to take shape is the regulation of artificial intelligence. Ukraine is preparing to harmonize its legislation with the European AI Act. Importantly, these are plans. There is currently no law that needs to be worried about right now.
The Ministry of Digital Transformation has prepared a roadmap, a White Paper, recommendations for businesses, and other tools that help companies understand future requirements and gradually adapt to them. Only after this is the adoption of a profile law on artificial intelligence planned, harmonized with the European AI Act. This approach is intended to give Ukrainian companies time to prepare for new rules while easing their entry into the European market.
To improve interaction between regulators and businesses, the Ministry of Digital Transformation has introduced a so-called sandbox, applications can be submitted there now. How it works: a team developing high-tech solutions based on AI or blockchain submits an application and can receive recommendations for further work, both technical and legal. You can apply at any stage of readiness, from concept to almost finished product. The website states that the purpose of the "sandbox" is to adopt logical and effective legislation in the future, based on the study of real products and their operation, but those who apply to the "sandbox" now will receive assistance in their work and preparation for entering the European market, so such data exchange will be mutually beneficial.
Preparing an AI product for verification and entry into the European market involves not only legal documents. The team will also need to assess where data is stored and processed, who has access to it, and whether the server infrastructure meets security and information protection requirements. Even at the testing stage, the team should consider the product's infrastructure: renting servers for data processing, setting up backups, and checking whether the hosting meets the requirements of the markets they plan to enter.
The main idea that Ukraine plans to borrow from the European AI Act is a risk-oriented approach. The greater the potential impact a system of artificial intelligence may have on human rights, health, or safety, the stricter the requirements for its development and use will be. For example, generating texts or images is considered less risky than AI used in medicine, during hiring, assessing creditworthiness, or managing critical infrastructure.
For such systems, requirements regarding risk assessment, data quality, technical documentation, human oversight, transparency, and safety may apply.
Grants and international cooperation
State support for IT today is not limited to DIYA.City. While the tax regime helps companies operate within the country, another direction — international programs — helps them enter new markets, attract funding, and find partners.
The most obvious tool is grants. Ukrainian technology companies can participate in both domestic and international programs. Among the most well-known are EIC Accelerator, Horizon Europe, Digital Europe Programme, Eurostars, NGI, and the Ukrainian platform Brave1 for defense technologies. Depending on the program, funding may cover the creation of prototypes, research, product development, business scaling, or entry into international markets.
In recent years, increasing attention has been paid not only to funding but also to international cooperation.
For example, in 2026, Ukraine and Japan launched a joint digital initiative Japan-Ukraine Digital Tech Cooperation Initiative. It aims to help Ukrainian and Japanese companies find partners, work on joint research projects, attract investments, and enter new markets. Priority areas include artificial intelligence, robotics, cybersecurity, and digital infrastructure.
European programs have a similar logic. For example, Ukraine's participation in Horizon Europe opens up opportunities to work in international consortia with universities, research centers, and companies from other countries. Importantly, Horizon Europe is not just a grant program. In most cases, it finances joint international projects, so Ukrainian teams not only receive funds but also work together with European partners, exchange experiences, and integrate into the international innovation ecosystem. However, a foreign partner still needs to be found, so the integration will not be superficial or formal. In less than five years of the program's operation, Ukrainian participants have attracted over 64 million euros in grant funding — more than in the entire previous seven-year cycle of Horizon 2020. The number of participating Ukrainian organizations and the average grant size have also increased.
Grant funds may be needed not only for the development of the product itself. The budget should also include creating a website, registering domains for international markets, renting servers, testing environments, and other components of a technical launch.
This may be a somewhat subjective observation, but as someone who has worked with startups, I would like to draw attention to another competency. When launching a new product, it is natural to first look for developers. However, the question of who will write grant applications, monitor international funding programs, or build partnerships is usually considered much later.
If the number of international programs for Ukrainian companies continues to grow, the ability to work with grants may become not just a useful skill but a completely real career path. Moreover, this applies not only to managers but also to people with a technical background who understand the product well and can explain its value in a language understandable to grant programs and international partners. However, this is a subjective opinion, and I currently have no numbers to support it.
And for now, we still have half a year of 2026 left, so there may be surprises, both pleasant and not so much.
